GLOBAL WATER PARTNERSHIP
EFFECTIVE WATER GOVERNANCE
Peter Rogers and Alan W Hall
TEC Background Paper No 7
November 2002
TABLE OF CONTENTS
Preamble
I
What is Governance?
II
Governance of Water
III
Achieving Effective Water Governance
IV
Some Final Observations
TABLES AND BOXES
REFERENCES
Acknowledgements:
This paper draws on work carried out by GWP with the Inter-American Development Bank and
the United Nations Development Programme. Help for drafting this paper came from many
quarters in particular Margaret Catley-Carlson, Miguel Solanes, Ivan Cheret and Laura Piriz
provided valuable guidance. We would also like to acknowledge contributions from all
members of the GWP Technical Committee and comments from Tony Allan, Luis Garcia,
Nighisty Ghezae, Meike van Ginneken, Ben Lamoree, Peter Lydon, Jerry Priscolli, Chiranjeevi
Shrestha and Hakan Tropp among others. The responsibility for the contents of the paper
remains, however, with the authors.
PREAMBLE
(Image of the Valencia Water Court will go here)
Governance is about effectively implementing socially acceptable allocation and regulation and
is thus intensely political. Governance is a more inclusive concept than government per se; it
embraces the relationship between a society and its government. Governance generally involves
mediating behaviour via values, norms, and, where possible, through laws. The concept of
governance of course encompasses laws, regulations, and institutions but it also relates to
government policies and actions, to domestic activities, and to networks of influence, including
international market forces, the private sector and civil society. These in turn are affected by
the political systems within which they function. National sovereignty, social values or political
ideology may have a strong impact on attempts to change governance arrangements related to
the water sector, as is the case for example with land and water rights or corruption.
The goal of this paper is to present a coherent discussion of water governance, and show how it
relates to water management and development. In the last few years the concept of integrated
water resources management (IWRM) has been accepted as a means to ensure equitable,
economically sound and environmentally sustainable management of water resources and
provision of water services. This approach is defined by GWP as: a process which promotes the
co-ordinated development and management of water, land and related resources, in order to
maximise the resultant economic and social welfare in an equitable manner without
compromising the sustainability of vital eco-systems (GWP, 2000). IWRM demands a new
framework within which there may be a need for significant changes in existing interactions
between politics, laws, regulations, institutions, civil society, and the consumer-voter. The
capacity to make these changes depends therefore on changes in governance.
This paper has been developed by the GWP as part of the Dialogue on Effective Water
Governance. It is aimed at water professionals who increasingly need to be familiar with issues
of governance as they strive to work outside the water sector. Governance is much debated but
is probably not familiar to the water community; the paper thus sets out in Section I the present
thinking on governance. It draws on current thinking by Kooiman (1993), Ostrom (1995),
1
Pierre (2001) and others but does not profess to be an exhaustive analysis and does not address
the wider areas of ‘good governance’ such as democracy, electoral systems and sovereignty. In
Section II the particular aspects of water governance are addressed and this covers both the
management of water as a natural resource and the use of water for social or productive
purposes. Section II gives some ideas on how to achieve effective water governance taking
account of governance both within and outside the water sector. It does not pretend to be
complete, indeed, one purpose of this paper is to stimulate more practical ideas and solutions.
Finally, Section III gathers some observations on water governance that need to be taken into
account when reforming systems and provides some examples of actions presently underway.
2
I.
What is Governance?
Governance is the exercise of economic, political and administrative authority to manage a
country’s affairs at all levels...it comprises the mechanisms, processes and institutions through
which citizens and groups articulate their interests, exercise their legal rights, meet their
obligations and mediate their differences. (UNDP)
Water governance refers to the range of political, social, economic and administrative systems
that are in place to develop and manage water resources, and the delivery of water services, at
different levels of society. (GWP, January 2002)
Governance relates to the broad social system of governing, which includes, but is not
restricted to, the narrower perspective of government as the main decision-making political
entity. There is no single definition of governance and different approaches may be followed.
Some may see governance as essentially preoccupied with questions of financial accountability
and administrative efficiency. Others may focus on broader political concerns related to
democracy, human rights and participatory processes. There are also those who look at
governance with a focus on the match and mismatch between the politico-administrative
system and the ecological system or in terms of operation and management of services.
Governance is already practised in all countries and the aim is to make it more effective. To
achieve more effective water governance it is necessary to create an enabling environment,
which facilitates efficient private and public sector initiatives and stakeholder involvement in
articulating needs.
Governance covers the manner in which allocative and regulatory politics are exercised in the
management of resources (natural, economic, and social) and broadly embraces the formal and
informal institutions1 by which authority is exercised. The new term for discussing this
combination of formal and informal institutions is distributed governance (Kooiman, 1993),
which is discussed later. There is a profoundly political element to governance, which involves
balancing various interests and facing political realities.
Although politics may set the agenda, the priorities and the vision, people need governance
systems that give the political vision credibility and ownership. Finally, management structures
must be established to carry out the day-to-day tasks.
1
Institutions are interpreted here to include both the formal (codified and legally adopted) and the informal
(traditionally, locally agreed and non-codified).
3
Governance as an enforcement mechanism
The need for collective action, and the organisation of government, stems from the realisation
that without collective enforcement of institutions, such as property rights, the anarchy which is
likely to result would only serve to consign human life to one of nastiness, brutishness and,
ultimately, short-termism. In a world inhabited by imperfect people, collective organisation is
required to balance the positive and negative aspects and prevent ‘bad’ people from doing harm
as much as enabling ‘good’ people to do good (noting, of course, that the ‘good’ and ‘bad’
people may be at different times the same people). The existence of government, however, is
insufficient in itself. If it is assumed that the players of the ‘game of politics’ are the same as
their fellow human beings, in terms of being self-seeking and opportunistic, constraints are
required (either electoral, constitutional, legal or other) to ensure that the political process is not
used for exploitative purposes.
Who is really in charge: models of Government systems
Governance can take many different forms depending on the economic, cultural and traditional
political norms of a country and the behaviour of the legislature and legislators. In some
countries politicians and the bureaucracy bargain over legislation and the focus is typically at
the executive branch, with the elected legislature hardly in the picture. In other countries the
behaviour of parliamentarians is critical with the focus on the elected assembly. To understand
democratic political behaviour is to understand that parliamentarians are "single-minded seekers
of re-election”. Their goals are to improve the welfare of their constituents in the shortest
possible time frame in order to ensure their re-election. This emphasises the need for robust
governance systems to capture the benefits and avoid the dangers of such short-term interests.
Legislators can only deal with limited information and they deal with this by specialising in a
particular and limited area; in other domains they take their cues from other sources of
information (agencies, colleagues, networks, committee reports, etc) that they have learned to
trust.
One of the key elements of governance is to create a framework (institutional and
administrative) within which strangers or people with different interests can peacefully discuss
and agree to co-operate and co-ordinate their actions. Some form of binding arbitration is
needed to break irreconcilable differences and this would ultimately reside in government and
the judicial system or within the UN and multi-lateral agreements at the international level.
4
Good Governance matters
Governance matters a great deal for economic, social and environmental outcomes. Some
necessary conditions for good governance are inclusiveness, accountability, participation,
transparency, predictability and responsiveness. When the governing system does not fulfil
these conditions we talk in terms of poor governance. Poor governance leads to increased
political and social risk, institutional failure and rigidity and a deterioration in the capacity to
cope with shared problems. Of course, governance systems should facilitate action and not
create an obstacle to development. Getting the right balance is a source of constant debate and
an ongoing process that will be continually changing over time.
Social analysts have shown that there is a strong causal relationship between better governance
and better development outcomes such as higher per capita incomes, lower infant mortality and
higher literacy (Kaufmann et al., 1999). Poverty reduction is enhanced by a stable and just
social order founded on clear institutional rules and effective and equitable markets. Effective
governance is thus essential to poverty reduction and can help the poor to help themselves.
Poor governance is a barrier to development and hurts the poor through both economic and noneconomic channels, making them more vulnerable and unable to adapt to changes. As a result,
markets will be weak and distorted thus holding back growth and employment opportunities.
Structural and institutional reforms are needed to turn poor governance into more effective
governance, including measures such as creating accountability in the use of public funds,
building national capacity for better policy formulation, implementation, and enforcement
mechanisms. It includes converting decision-making and implementation into more inclusive
processes where civil society and the private sector have clear roles to play with shared
responsibilities on the basis of public-private partnerships. The division of labour between the
different actors and the sharing of responsibilities and balancing power relations are all part of
the same process, that of defining the governing system.
The State and society2
For many years the question has been “can the State steer society?” Governance in the past
dealt with how the State steered society and the economy through political brokerage (often
determined by economic power), defining goals, fiscal measures, setting priorities etc. In most
developing countries, which typically have a strong society and a weak State, this remains the
dominant model, increasing the risk of resource mismanagement and financial bad practice.
5
The question currently posed is “can society co-ordinate and manage itself?” This is the
essence of distributed governance. It looks at co-ordination and the various forms of formal
and informal types of State/society interactions and the role of civil society3 and policy
networks. This is more society-centred and less ‘Statist’, with governance systems providing the
power balance, recognising of course that political power is derived essentially from economic
resources and instruments. Today, however, in many developed countries, government no
longer exercises a monopoly on the orchestration of governance.
At the beginning of the 21st century, we are thus searching for coherence and accountability in
the maze of organisations within national (and international) political systems. However, many
of today’s institutions and government systems were developed in the 19th century to supervise
States with much more limited functions than today. The developing countries face particular
problems as they often have layers of systems – some indigenous and others imported. It is not
expected that developing countries can or even should adopt the same systems as industrialised
countries but there are basic principles for effective governance that they need to adopt in their
own way. The State may need to act quickly to develop the essential infrastructure for
development and cannot wait for the ‘ideal’ governance systems to be established. Nevertheless,
any development should be done hand in hand with governance reforms that will help to make
the development sustainable. Care should be taken, however, not to further weaken an already
weak State.
The real reins of power – from hierarchies to devolution
The historical context of governance varies in time and space. In Europe and North America,
for example, industry and capital investment backed by a strong State have been the dominant
background forces that have shaped governance systems. However, the traditional bases of
political power have been eroded in the last 20 years or so and the institutional strength of the
State is being challenged. Some recent changes in society have facilitated this weakening of the
central State. Some of these changes include:


fiscal crises within the State (limitations on raising taxes);
technological advances that facilitate networking and subsidiarity;
2
This section draws heavily on J Pierre, ed, Debating Governance, OUP, 2000.
Civil society can be considered to be composed of all general-purpose non-governmental organisations such as
professional societies, labour unions, interest groups, trade groups, political parties, and other freely formed clubs and
associations. Of course, special-purpose interest groups are also part of civil society. In contemplating water
governance, the broadest definition of civil society should be used.
3
6

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the globalisation process, including deregulation of financial markets and volatility of
capital, which restricts the State’s ability to govern/control the economy;
a more assertive sub-national democracy in cities or semi-autonomous regions;
excessive workload and responsibilities on smaller government bureaucracies; and
large concentrations of people and political power in urban areas.
Hierarchical governance: Part of modernisation is generally seen as the evolution of political
systems from top-down, hierarchical government systems with centralised institutional settings,
to more decentralised administrative forms. There is no evidence that more decentralised
systems are necessarily more effective than centralised ones. The real test here is, “what works
in the particular setting?” There is, however, a perceived ever-widening gap between those
countries that have managed to move toward subsidiarity - or the performance of functions at
the lowest effective level - and those that remain centralised and stagnant. The forces for change
listed above have an even greater impact in poorer countries as expectations rise for a better
quality of life. There is a growing dissatisfaction with ineffective but costly State machinery,
lack of vision or leadership, weak financial discipline and political dictates crippling
administrative functions. With respect to distributed governance, rich and poor countries are
generally growing apart. More mechanisms exist in developed countries to establish the
required new governance systems than is the case in most of the less developed countries.
There is a great urgency for countries to establish their own governance systems by learning
from, but not imitating, inappropriate models from the richer countries with their different
historical and cultural backgrounds.
Market-led governance: With the end of the Cold War in the closing decades of the 20th
Century, the market was proposed by many in the western countries as the solution to economic
growth, social equity and environmental problems. This led to deregulation and more
involvement of the private sector and a changed role for the civil service and civil society. This
institutional restructuring of the State aimed to reduce government command and control
functions with more individualism (fewer collective solutions) and private enterprise and the
market as the superior resource allocation mechanisms. This market-led governance model is
the immediate background in which we now examine governance with respect to water
resources management and the delivery of water services.
Today the honeymoon with the laissez-faire market-led model is over and hard questions are
being asked. It is considered by many to be too simplistic (hierarchies may not work well but
markets do not necessarily work well either in all situations) and not representative of wider
societal values. More people are examining what new instruments and new forms of exchange
7
between State and society can be developed to ensure political control and societal support.
From this examination, propositions for management in partnership, co-management and cogovernance, and distributed governance, have developed.
Distributed governance: At the beginning of the new millennium the State’s role of “directing”
or “steering” society is being challenged by cohesive local networks (civil society, private
sector) and global networks (international organisations and NGOs) with these same entities
also supporting the State in its aims to develop society. This gives a dynamic relationship
between different social forces. Many politicians (mainly in the West) see the State increasingly
as part of the problem rather than the solution. There are more calls for a return to smaller
government, reversing the post second world war ideology of a hierarchical central State caring
for its citizens. The State no longer believes it can solve societal problems acting alone,
particularly socio-environmental ones, and the private sector alone cannot address the problems
of the poor and the environment. The command and control or hierarchical model and the
market-led governance models are both thus much weakened.
Clearly modern governance sees formal authority being supplemented by an increasing reliance
on informal authority, for example, through genuine public-private co-ordination and cooperation to the benefit of both of these as well as the customer/citizen. (Organisations such as
the GWP and international NGOs such as Transparency International are examples of such cooperative networks.) The State thus needs to adapt to a new situation and distributed
governance is an institutional response to the changed environment. Distributed governance is
thus the empirical manifestation of State adaptation to its external environment. It is the
conceptual representation of the co-ordination of social systems and specifically the role of the
State in that process.
Establishing modern governance systems
Modern governance can be about how to maintain some “steering” capacity in a world full of
external (and internal) societal independence. Establishing national legal regulations (the rules
of the game) becomes increasingly complex as society becomes full of informal institutions.
This leads to a proliferation of rules that can undermine the rule of law as a result of the scale,
complexity and cost of the legal system itself and its inability to enforce laws. In many
developing countries extra-legal informal activities flourish as the only alternative to the
stultifying State bureaucracies (de Soto, 2001).
8
Overcoming corruption is clearly an important aspect of governance. Until recently the lack of
information and political will has made it difficult to openly discuss this problem which is rife
throughout the world and applies equally to the public and private sector. The law can, for
example, address the problem of corruption but it is a heavy and expensive instrument, a
measure of last resort, as it is difficult and costly to bring people to court. With distributed
governance, more open competition, more accountable public administrations and more
transparent processes may address the problems of corruption. There are many measures that
can be used without recourse to law, including reduced public sector intervention in the
economy, reform of public administrations, liberalisation and reduced bureaucracy and fair pay
for workers. All these measures can help to reduce the temptation for corruption. Regulators and
watchdogs, such as some NGOs, a strong independent media, and self governance (for example,
corporate social responsibility, codes of conduct etc) can produce social sanctions that will deter
all but the most unscrupulous from corruption.
Similarly, there has been a proliferation of non-accountable civil society and non-governmental
organisations that call for action from a narrow platform but have no responsibility for the
consequences of the actions they propose. The governance vacuum left by the weakness of
legitimate local government has been filled by often well-meaning but non-accountable
organisations.
Governments are too often caught up in contradictory roles, being at once provider of services
and the guaranteed source of accountability for those services. Local government is often
absent or weak and civil society organisations have no legal base. A key element of effective
governance is thus institutional reform (affecting both State and social institutions) in order to
devolve as many functions of the State as possible to society and democratising as many as
possible of the organisations in civil society. This could mean a move towards a society with a
limited but strong government and a politicised (and voluntary) civil society; thus moving from
top-down bureaucracies to constitutionally ordered, democratically self-governing associations.
The Dublin principles4 manifestly reflect this concept of distributed governance.
4
The Dublin principles that guide the IWRM approach are:
Fresh water is a finite and vulnerable resource, essential to sustain life, development and the environment.
Water development and management should be based on a participatory approach, involving users, planners and
policy-makers at all levels.

Women play a central role in the provision, management and safeguarding of water.

Water has an economic value in all its competing uses and should be recognized as an economic good


9
Governance systems must be established that overcome the legitimacy and accountability
problems of marketisation. This can be achieved through the establishment of self-governing
rules and networks so there are independent checks and balances. However, western
governance is often founded on a social fabric of equitable sharing and strong public watchdogs
that may not be readily transferred to developing countries. Governance systems balance power
and priorities. Government may “decide” how to structure society with incentives (e.g. budgets
using money as motivation). But they need to take into account internal and external pressures
and economic forces, including civil society aspirations and priorities, internationally agreed
conventions or declarations, decentralisation and regional co-operation as well as donor
priorities (for poorer countries), macro policy (finance and planning) and short-term political
priorities.
Establishing effective governance systems has been a key aspect of development co-operation
for many years and all major donors and development banks as well as private investors
increasingly take account of governance when assessing the efficiency and effectiveness of their
investments. The fact that private investors are prepared to pay companies (for example, the
Economist Intelligence Unit) for governance information illustrates the importance of
governance to their decisions. The process is, however, slow and can lead to resentment to
interference in national sovereignty as it is usually centred on the highest political level. By
focusing governance issues specifically at the water sector more practical and manageable
solutions may be possible.
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II. The Governance of Water
Since the Dublin conference in 1992, significant international goals have been set that relate to
water governance. At the 2000 World Water Forum in The Hague, the GWP Framework for
Action (GWP, 2000) stated that the water crisis is often a crisis of governance, and identified
making water governance effective as one of the highest priorities for action. The 2000 Hague
Ministerial Declaration reinforced this view and called for governing water wisely to ensure
good governance, so that the involvement of the public and the interests of all stakeholders are
included in the management of water resources. At the Bonn 2001 Freshwater Conference the
ministers recommended action in three areas, with water governance as the most important.
They proposed that each country should have in place applicable arrangements for the
governance of water affairs at all levels and, where appropriate, accelerate water sector
reforms. The UN 2000 Millennium Assembly emphasised conservation and stewardship in
protecting our common environment and especially to stop the unsustainable exploitation of
water resources, by developing water management strategies at the regional, national and local
levels, which promote both equitable access and adequate supplies. This was endorsed at the
World Summit on Sustainable Development in 2002 where Heads of State agreed a specific
target to prepare IWRM and water efficiency plans by 2005. To be meaningful these plans will
need to take cognisance of prevailing governance systems and allow for necessary reforms.
What is water governance about?
The term “water governance” needs to be carefully defined, as it may not be readily
understood. It is also important to identify the attributes that make water governance
“effective”. The Global Water Partnership defines water governance as follows:
Water governance refers to the range of political, social, economic and administrative systems
that are in place to develop and manage water resources, and the delivery of water services, at
different levels of society.
The notion of governance for water includes the ability to design public policies and
institutional frameworks that are socially accepted and mobilise social resources in support of
them. Water policy and the process for its formulation must have as its goal the sustainable
development of water resources, and to make its implementation effective, the key
actors/stakeholders must be involved in the process. Governance aspects overlap with
technical and economic aspects of water, but governance points us to the political and
11
administrative elements of solving a problem or exploiting an opportunity. Governance of
water is a subset of the more general issue of the creation of a nation’s physical and institutional
infrastructure and of the still more general issue of social co-operation.
Water governance is concerned with those political, social and economic organisations and
institutions (and their relationships), which are important for water development and
management. Given the complexities of water use within society, developing, allocating and
managing it equitably and efficiently and ensuring environmental sustainability requires that the
disparate voices are heard and respected in decisions over common waters and use of scarce
financial and human resources. Water governance is concerned with the functions, balances and
structures internal to the water sector (internal governance). It includes the framing of social
agreements on property rights and the structure to administer and enforce them known as the
law. Influences also come from civil society and from the “current” government and these are
considered parts of the external governance of water, which will be discussed later. Although
issues can arise for water governance from the economic and technical spheres, in most
countries the driving force is politics. Effective governance of water resources and water service
delivery will require the combined commitment of government and various groups in civil
society, particularly at local/community levels, as well as the private sector.
Water governance principles and legal bases
The Dublin Water Principles (1992) bring water resources firmly under the State’s function of
clarifying and maintaining a system of property rights, and, through the principle of
participatory management, asserts the relevance of meaningful decentralisation at the lowest
appropriate level. There is increasing pressure to recognise and formalise water rights and this
is happening in many countries. Formalising rights raises complex questions about the plurality
of claims and the balancing of the distribution of benefits among the social groups. It also
imposes responsibilities including in particular that of pollution prevention and financial
sustainability. The process of formalisation is often biased in favour of the rich and powerful
who may abuse the system and capture rights. Informal ‘rights’, as defined locally with their
historical rules and principles, are equally important and improper formalisation may lead to
conflict between the formal and traditional. The formalisation of rights may be unnecessary or
insufficient to secure access to water resources. The capacity to defend rights against
competing claimants is essential for the rights to be meaningful, whether they are formal or
12
informal. An important matter to clarify is to what extent the processes of devolving water
rights serve segments of a population, or its entirety.
Water law varies widely
The theoretical bases of governance with regard to water are a subset of theories of collective
behaviour. Unfortunately, no one simple theory explains every situation. There is often a
marked difference between the philosophical Continental European and Latin American
approaches and the pragmatic US-Anglo Saxon schools of thought. A relatively clear original
demarcation of property rights and experimentation with these rights over time has led the US
to flexible approaches to water governance. This approach allows for adjustments when
economic and social conditions change because it does not aspire to build institutions that cover
all possible eventualities. There are also systems which are hybrids of the Civil law
(philosophical, descended from Roman law) and Common law (pragmatic, from Britain)
approaches, as well as systems with other ancient roots, such as those of the pre-Colombian
Americas, India and Islamic countries.
There are also systems of social rights and responsibilities which remain traditional and
uncodified, and are not necessarily less strong because they are manifested in cultural
expectations rather than written rules. A social perception of equitable sharing is important to
governance. The notion of flexibility and equitable sharing is, however, alien to many countries
whose governance systems are rigid and do not allow for ‘reasonableness’. Adaptive capability
is often not present and without enforceable sanctions, poor governance systems favour the
strong. This makes it very difficult and even dangerous to translate practices based on flexibility
and pragmatism into many developing country governance environments, unless the prevailing
social system can provide adequate sanction against miscreants.
Water Law is about property rights
The State has an important role to play through its core function of defining property and use
rights and responsibilities. In modern pluralistic democratic societies, the foundation of the
State rests upon the publicisation5 (the term for the shift from the private to the public sphere) of
the costly monitoring and policing needed to protect productive assets from being redistributed
to intruding claimants. Without this policing, called the law, systems of property would never
have advanced beyond appropriative behaviour backed by force. Discussions of water rights
5
Also called nationalisation in some countries.
13
usually focus upon the rights of the property right holder and ignore the contingent
responsibilities which that holder has with regard to others in society who do not share the
rights. These obligations need to be stressed in any discussion of governance. Also, any
discussion on water rights must take account of land use and land ownership as they are often
closely linked, sometimes formally through riparian rights, and land owners can affect water
through land use changes such as reforestation
Examples of different property rights regimes, with their associated rights and obligations,
include:
•
•

•
Open Access
Open access is a regime where no defined group of users or owners are identified and the
benefits are available to anyone. Individuals have both privilege (the ability to act
without regard to the interests of others) and no right (the incapacity to affect the actions
of others) with respect to usage and maintenance of the asset.
Common Property
A management group has been defined and the group has a right to exclude nonmembers and define the rules of appropriation. Non-members have a duty to abide by the
rules. Individual members of the management group have both rights and duties with
respect to usage and maintenance of the property and thus hold rights to manage the
resource.
Private Property
Individuals own the resource and have the right to exclude others and transfer rights.
They have a duty to refrain from socially unacceptable uses. Others (non-owners) have a
duty to respect decisions by the owners and expect that only socially acceptable uses will
occur.
State Property
Water is vested in the State – acting for citizens - individuals have a duty to observe use
and access rules determined by the controlling agency of the State.
Water resources may start within an open access regime but is often appropriated by a group
and becomes a common property resource. When individuals or groups of individuals share
water resources as a common property resource, people are connected in a socio-political,
economic and ecological sense (Ostrom, 1999). In a common pool, actions influence those
sharing the resource regardless of the property regime under which the resource is held and
from this perspective its governance is distributed.
To control the resource the State tends to appropriate most of the rights from the common
property group to create State property with a lesser amount owned privately. The State is then
faced with the responsibility of how to deploy the resource to the national advantage. A key to
water governance at the beginning of the 21st century is how, through politics, the State can
achieve this fairly and equitably, without reducing incentives for efficient use of the resource.
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Water information networks, consultation, and policy reform
As mentioned earlier, one of the key tasks of governance is to create a framework (institutional
and administrative) within which strangers or people with different interests can peacefully
discuss and agree to co-operate and co-ordinate their actions. This framework should also
reduce the transaction costs of pursuing effective water management. Therefore, information
networks (or partnerships) are important and may function in conditions where other governing
structures do not. Information networks work best when the following conditions apply and
combine (Pierre, 2000):











Actors need reliable information;
Quality is difficult to define and measure;
Commodity is difficult to price;
Professional discretion and expertise are core values;
Flexibility to meet localised and varied service demands is needed;
Cross-sector multi-agency co-operation and production are required;
Co-operation confronts disparate organisational cultures;
Actors perceive the value of co-operative strategies;
Long-term relationships are needed to reduce uncertainty;
Monitoring and evaluation incur high political and administrative costs; and
Implementation involves haggling.
Water fits almost all of these conditions and provides a good example of where human networks
of concerned groups (e.g. government, private sector and civil society) may work better than
either hierarchies or markets alone. Markets represent an important network highly dependent
on information.
When proposing changes to water governance systems, it is important to understand and
distinguish between the different functional levels in water management: operational,
organisational and constitutional. The first focuses on the use or control of water for specific
purposes to fulfil specific needs. There are always a plethora of operational enterprises covering
domestic water supply, wastewater treatment, hydropower, irrigation, environmental
management, tourism etc and they can be in public or private hands. The organisational level
co-ordinates and reduces conflict between these competing enterprises, administers the rules
and polices water use and the users in a water system. This function resides within the public
sector – and includes for example river basin authorities and regulatory bodies – the latter
should be autonomous (within constitutional boundaries) if they are to act impartially. Finally,
the constitutional function creates the enabling environment within which the other functions
operate. It sets the policies and legislation, taking into account external governance and political
15
imperatives. In many countries such functions are unclear and often governments may be unable
or unwilling to exercise their responsibilities. In this case ad hoc arrangements at local
government or community level are often established. These are vulnerable as they may lack
any formal basis and can be adversely affected by vested interests or by central government
policies and laws. A participatory and consultative approach when reforming water governance
systems can help to strengthen local government and bring the positive aspects of such
arrangements into the formal system and reduce vulnerability.
New forms of water governance
Hydro-geographical boundaries – the river basin – often provide opportunities for modern
governance networks. A basin is a closed region where there are incentives for people to come
to an agreement on governance systems with water as the focus. Although basins cut across
formal jurisdictional boundaries and thus local government and other government entities which
do not necessarily work together, the basin society (a river basin agency or commission) could
require them to do so. The basin society may thus have specific governing capacities and needs.
National governments acting alone cannot easily allocate and regulate water in a basin, as they
are unlikely to appreciate local interests or priorities. Government should, however, provide the
rules and regulations and establish a framework for local people to meet. (For example, the
basin community has a spatial footprint such as in the Catchment Management Agencies in
South Africa and the River Basin Agencies in France). Regulation within a basin must address
issues of quality as well as allocate quantity to users. Regulation of other sectoral users such as
agriculture and industry is very weak. Preventing pollution from agricultural water use (salinity,
nitrates in groundwater) and from industries such as tanneries and mining is becoming
increasingly important. In Pakistan, the recently gazetted Sindh water management ordinance
recognises the need to regulate irrigated agriculture. Catchment planning and management,
combining land and water use, is a means to regulate at the basin level but hitherto the tools
have not been readily available to make this practical. New approaches, as found for example in
the EU Water Framework Directive and the Streamflow Reduction Strategies in South Africa,
are now starting to incorporate this into governance systems.
Water laws and regulation of water utilities are key instruments that have been discussed at
length and provide many examples of weak governance. The introduction of laws and their
implementation is a political process that relates to political polarisation of society. Good legal
and institutional instruments in one country may not work in others, as a result of a weak or
16
inappropriate external governance system. For example, the flexible, pragmatic approach
common to the USA does not suit the cultural environment in most developing countries. A
common problem is that of weak regulation of utility providers. For example, when strong
private water utility owners negotiate provisions that jeopardise benefits to the public (such as
extravagant guaranteed returns, fixed exchange rates and interest rates, etc) it can lead to
disillusion with private sector involvement in service deliveries. Similarly, public utility owners
are often manipulated by governments and can be job havens or cash cows leaving them weak
and underfunded with poor services for the public. Strong regulation is thus essential for both
public and private utilities with a clear definition of the respective duties of the regulator and
operator.
Lower water use, lower conflict levels
It is obvious that the water crises are due to an increase in demand and reducing that demand
would help greatly even though there would still be problems of existing levels of resource
conflicts and environmental degradation. Demand for water can be reduced voluntarily by using
many different technical, social, and economic tools. Essentially, this means that the consumer
will change his or her consumption preferences. Regulatory instruments involving permits,
restrictions, and allocations to various users and uses can also reduce water demand. For
example, total water demand in the USA has declined from a high in 1980, despite large
increases in wealth and population. This means that maintaining aquatic environmental quality
is getting progressively easier. In this case direct water pricing policies have not brought about
this decline. It appears to be largely due to external factors such as higher energy costs and
mandated energy efficiency improvements to domestic and commercial water appliances and
decline in the value of irrigated crops. Specific water policy measures such as effluent
limitations on wastewater discharges and enforcement of federal in-stream water requirements
for ecosystem maintenance have also had a significant impact. It is worth noting how wellinformed public pressure acted as a driver for policy change and technological innovation to
achieve water savings. Each person reduced his or her water use, and overall, this has made a
big difference in water availability in USA.
An important matter is the extent to which the processes of publicisation and devolution of
water rights serve segments of a population, or its entirety. The issue of Private Sector
Participation (PSP) for water services has recently become a contentious issue. From a
governance point of view, however, the nature of the supplier is less relevant than the nature of
17
the protection of consumers. Both public and private suppliers, through their mandates, pricing
policies and supply norms, can either include or exclude the poorer section of the population.
For example, cross-subsidy, if used judiciously, is a useful tool commonly used throughout the
world to benefit the poor without adverse impacts on others or on the economy.
The politics of water governance are typically the sociological and economic factors (structures,
institutions, etc) that lie outside the provision of water and reflect the more general political
make-up of the country, the water institution’s setting. For a water resources manager or water
service provider politics is certainly part of his or her governance domain, but is usually not
considered directly relevant to their actions.
Governance failures
An underlying theme of social science literature is that all governing structures ‘fail’ and all
markets and hierarchies have their limitations and also ‘fail’. More effective governance
regimes or systems need to be designed/created to overcome government failure, market failure
and system failure or a combination of these. For example, water is not a simple economic
good; it is sometimes a public good, sometimes a private good and often lies somewhere inbetween. Its development can lead to natural monopolies, and it presents major economic and
physical side effects or externalities.
Governance failures are listed in Table 1. They are inherent in most countries and have to be
addressed. The Global Water Partnership has prepared a ToolBox for IWRM (GWP, 2001) that
includes a range of instruments that can be used to address governance failures. Institutional
and communication gaps are likely to be the most difficult. An empirical examination of how to
overcome the problems caused by market, government and system failures is essential for each
specific setting if effective water governance is to be achieved. There are failures that cannot be
easily addressed by water sector professionals as they lie outside the water domain: for
example, national institutional structures that impede political vision, poor mechanisms for
inter-sectoral dialogue, coping with unpriced assets and public goods such as flood control and
drought management. The water community nevertheless needs to understand such external
governance constraints and engage with non-water organisations to seek solutions.
18
Governance external to the water sector
Water governance can draw strength from existing governance structures in other sectors in the
country, for example through the stabilisation of property rights, broad rules and laws. Certain
more general Californian State laws for example aided the creation of Californian groundwater
basins. The end of apartheid in South Africa facilitated significant changes to water laws and
the accession of Eastern European countries to the European Union has acted as a spur to
improved water governance. Conversely, if the service provider succeeds, it can also validate
and strengthen the politics that made it possible. There are several examples of water
governance influencing external governance. The best known of these is perhaps the cooperative water development in The Netherlands in the early part of the 20th century which was
an important part of nation building for the modern Dutch welfare state.
It is not surprising that water service providers feel the impact of external governance on their
own internal governance. It is not uncommon for services to be paralysed by political
interference and conflict. Indeed, external governance may prevent new forms of service
provision coming into existence, either through ignorance or vested interests. In extreme
circumstances this has even extended to the involvement of organised crime in undermining
public water supply providers. Many interventions from the external governance sphere could
be constraining, but others could be supportive, integrative and helpful in the longer run. This
perspective on governance tells us that political capital developed entirely outside the water
sector can be brought to bear within water affairs, for the good or for the ill of the service
provider or resource manager. Therefore, a favourable or at least neutral external setting is
critical for the success of a water service provider.
Water governance traditionally begins from the social and economic policies set by
government. However, with the growing liberalisation of trade, water services are becoming
increasingly affected by international trade agreements. Often such trade agreements are
negotiated by Trade Ministry officials who know little about water and may not necessarily
consult water officials. Recent concern has been expressed by some NGOs about the inclusion
of water services in the General Agreement on Trade and Services (GATS). Whilst
liberalisation of such services may be beneficial in raising foreign direct investment, countries
need to take care in negotiating the rules under the GATS. Government negotiators can place
limitations on the commitments it makes in a specific service sector thus restricting the
19
application of GATS rules but this is a complex issue and often developing country negotiators
are in a weak position in such negotiations.
Of particular concern is the conflict between promoting trade and protecting the regulatory
rights of national government. It is accepted by all that the ability of government to regulate
water services providers is essential for effective private or public sector provision of water
services, but the government’s right to regulate may be restricted under GATS. Apart from
GATS other trade agreements, such as NAFTA, can affect water. For example, the negotiations
recently started on the Doha Round of talks on agricultural trade liberalisation could affect
water use for food production. Similarly, debt repayments and HIPC (Highly Indebted Poor
Countries) agreements may skew a government’s ability to allocate budgetary provisions for
water services.
20
III.
Achieving effective water governance
Judith Tendler (1997) noted that we know a lot more about what constitutes bad government
than we do about achieving good government. Her case studies tend to question some
conventional nostrums and preconceptions of how governance should be and drive us back to a
close functional analysis of each individual case. Ostrom (1995) provides empirical examples of
water governance from the USA, Indonesia, Nepal, Mexico, Peru, Philippines, and Sri Lanka.
Maass and Anderson (1978) provide in-depth analyses of the development of the governance of
irrigation since the 15th century in Valencia, Murcia, and Alicante in Spain. In all of these
empirical studies the authors found strong evidence to support the notion that, despite a wide
range of property rights regimes, user groups could develop into sustainable institutions over
many years (centuries in the case of the Spanish irrigation property rights sharing systems).
Essentially, there is a possibility of identifying a level of centralisation and decentralisation and
regulation to produce effective water governance. Whilst empirical evidence suggests there can
be no dogmatic solutions, it would be helpful to establish some universal attributes that make
water governance effective in practice.
New ideas about water governance
There is a growing perception that the governance of water resources and water services
functions more effectively with an open social structure which enables broader participation by
civil society, private enterprises and the media, all networking to support and influence
government. Moreover, examining the role of networks or distributed governance helps to
overcome the sterile debate about private versus public water service delivery and the role of
the community. The goal of creating a proper governance system gives the debate a more
practical focus. The role of civil society and NGOs in water management and service delivery
also becomes clearer as government regulation facilitates local self-governance.
It is important that in designing effective governance systems transaction costs are not unduly
increased and action is not stifled. There will always be trade-offs and it is important to get the
right balance for each situation rather than seeking the ideal system. In the developed north,
governance systems are often unwieldy and can frustrate development but the mature nature of
society demands this level of governance. In poorer countries governance systems must not
impose too many restrictions on action otherwise economic growth and the provision of basic
needs for the poor will be impeded. Too often, well-meaning demands to improve governance
can be a brake on development. The economic and social transaction costs of governance may
21
be quite large and care should be taken to ensure that they are within reason and they should be
carefully monitored.
There is no single model of effective water governance; indeed to be effective governance
systems must fit the social, economic and cultural particularities of each country. Nevertheless,
there are some basic principles or attributes that are considered essential for effective water
governance:
Principles for Effective Water Governance
Approaches

Open and Transparent: Institutions should work in an open manner. They should use
language that is accessible and understandable for the general public to increase
confidence in complex institutions. In addition to being open, good governance requires
that all policy decisions are transparent so that both insiders and outsiders can easily
follow the steps taken in the policy formulation. This is particularly important with
regard to financial transactions.

Inclusive and Communicative: The quality, relevance and effectiveness of government
policies depend on ensuring wide participation throughout the policy chain - from
conception to implementation. Improved participation is likely to create more
confidence in the end result and in the institutions that deliver policies. Participation
crucially depends on all levels of government following an inclusive approach when
developing and implementing policies. Broad participation is built on social
mobilisation and freedom of association and speech, as well as capacities to participate
constructively. Transparency and accountability are built on the free flow of
information. Governance institutions and systems need to communicate among the
actors and stakeholders in very direct ways. Correctly done, this will lead civil society
to be socialised into governance over a wide range of issues.

Coherent and Integrative: Policies and action must be coherent. The need for harmony
and coherence in governance is increasing as the range of tasks has grown and become
more diverse. Challenges such as climate and demographic change cross the boundaries
of the sectoral policies on which the government has been built. Coherence requires
political leadership and a strong responsibility on the part of the institutions at different
levels to ensure a consistent approach within a complex system. Water governance
should enhance the effectiveness of Integrated Water Resources Management (IWRM).
The institutions will have to consider all uses and users within the traditional water
sector and also their interconnections with and impacts upon all other potential users and
sectors.

Equitable and Ethical: All men and women should have opportunities to improve or
maintain their well-being. Equity between and among the various interest groups,
stakeholders, and consumer-voters needs to carefully monitored throughout the process
of policy development and implementation. It is essential that the penalties for
malfeasance are, and are seen to be, equitably applied. Above all, water governance has
to be strongly based upon the ethical principles of the society in which it functions and
22
based on the rule of law. This manifests itself most strongly in the issue of justice,
property rights for use, access, and ownership of water. Legal and regulatory
frameworks should be fair and enforced impartially.
Performance and Operation

Accountable: Roles in the legislative and executive processes need to be clear. Each
institution must explain and take responsibility for what it does. But there is also a need
for greater clarity and responsibility from all those involved in developing and
implementing policy at any level. The “rules of the game” need to be clearly spelled out,
as should the consequences for violation of the rules, and have built-in arbitration
enforcing mechanisms to ensure that satisfactory solutions can still be reached when
seemingly irreconcilable conflicts arise among the stakeholders. Decision-makers in
government, the private sector and civil society organisations are accountable to the
public, as well as to institutional stakeholders. This accountability differs depending on
the organisation and whether the decision is internal or external to an organisation.

Efficient: Classical economic theory demands efficiency in terms of economic
efficiency, but there are also concepts of political, social, and environmental efficiency
which need to be balanced against simple economic efficiency. It is also essential that
governance systems do not impede action, for example, minimising transaction costs
will go a long way toward political and economic efficiency.

Responsive and Sustainable: Policies must deliver what is needed on the basis of
demand, clear objectives, an evaluation of future impact and, where available, of past
experience. Responsiveness also requires policies to be implemented in a proportionate
manner and decisions to be taken at the most appropriate level. Most importantly, the
policies should be incentive-based. This will ensure that there is a clear social or
economic gain to be achieved by following the policy. The institutions should also be
built with an eye toward long-term sustainability. Water governance must serve future
as well as present users of water services.
Using Integrated Water Resources Management tools
The IWRM approach eschews politics and the traditional fragmented and sectoral approach to
water and makes a clear distinction between resource management and the water service
delivery functions. It should be borne in mind, however, that IWRM is itself a political process,
because it deals with reallocating water, the allocation of financial resources, and the
implementation of environmental goals. There is a general agreement in the water community
that IWRM provides the only viable way forward for sustainable water use and management –
although there are no universal solutions or blueprints and there is much debate on how to put
the process into practice. Moreover, IWRM is not applied in a vacuum and the broader picture,
as described by governance, provides the context in which the IWRM approach can be applied.
The political context, however, affects political will and also political feasibility. Much more
work remains to be done to establish effective water governance regimes that will enable
23
IWRM to be applied. This pertains to both the management of water resources and the delivery
of water services.
To establish effective water governance systems and put IWRM into practice there is a range of
tools available to policy makers and practitioners as described in a large range of literature. The
GWP ToolBox for Integrated Water Resources Management (GWP, 2001) brings together an
array of over 50 tools and references that can be used by practitioners to overcome governance
failures (see table 1) and it is supported by experiences from around the world. Different
countries will need to identify which management tools or instruments are most important and
appropriate given their specific circumstances. To illustrate some important governance
messages addressed by the ToolBox three case studies are summarised below.
Governance and institutional reform in Chile
The instruments that have been receiving the most attention in Latin America, for example, are
those addressed to market failure. A major emphasis in the Chilean water reforms has been on
the correct pricing of the water resource to reflect opportunity costs over and above the tariff.
Similar attempts are underway in Costa Rica and Ecuador where downstream users pay the
watershed owners and managers for watershed services. Chile (Box 1) has been a world leader
in water governance, and as such has had few examples to follow. The external governance of
the Chilean experience is instructive since there was a major commitment to development based
on an export-oriented open economy. Water just had to follow suit. Many mistakes with
openness, transparency, participation, and ecosystem concerns were made in the hurry to get
effective water markets established. However, the system is adaptive and now these concerns
are being addressed 20 years after the initial laws were passed. 20 years is a very small time
span with respect to water policy and governance; it took the US almost 200 years to finally
build in participation and ecosystem concerns into its water governance.
Decentralisation in Mexico
Agriculture remains the highest water user in many countries and there have been few attempts
at reform to make water use more efficient because so many farmers (in civil society) make
their social/livelihood needs very evident. In both developed and developing countries the subsector has strong vested interests and weak governance systems. Governments typically have
neither the will nor the resources to oppose the rural political imperatives and the consequences
of this for the water sector are major. A determined attempt to address the many related
governance issues is well overdue. The Mexican case (Box 2) shows how a formerly strictly
24
hierarchical government irrigation agency can decentralise decision-making and devolve
management responsibilities to the level of farmers’ groups with water rights and management
of publicly owned irrigation systems transferred to Water Users Organisations (WUO) on
almost 3 million ha. Although this covers only a part of the irrigated area - and the most
sophisticated areas - it is an important step towards decentralisation. By taking a purely sectoral
approach, some opportunities for more efficient water uses have been overlooked. However,
this provides a stepping stone to greater reform. As we have already stated, developing effective
governance systems is a long-term iterative process.
Governance and shared waters
The case of Lake Peipsi (Box 3), a lake shared by Russia and Estonia, is a good example of
using IWRM tools in managing transboundary waters and shows how political will and cooperative approaches can lead to sustainable water resources management. It also demonstrates
the difficulty of involving local civil society in sensitive political discourse. The first and
clearest lesson is that States and governments are likely to get into serious political and social
difficulties if they ignore the ideas of participation and openness. The value of distributed
governance is demonstrated, although the barriers to change in many countries indicate that this
will evolve slowly over many years.
The Lake Peipsi case also highlights the specific issue of water governance related to the use of
shared waters between nation states. This raises special governance problems that cannot be
adequately covered here and too often it has been force that dictates decisions and actions.
There are, however, increasing examples of water being a catalyst for regional co-operation
with negotiation for shared waters based on the benefits that all parties can accrue from any
agreement. The recent Agreement on the Incomati and Maputo Rivers in southern Africa is an
example. Progress on the Nile Waters Initiative is another example of a patient governance
dialogue where the catalyst for negotiations was the benefits of increased security and stability
and consequent economic development for all parties rather than water use as such.
Although most negotiations are on a bilateral basis, there are international laws and regional
agreements that refer to shared water use and resource management. An important regional
convention is for the Protection and Use of Transboundary Watercourses and International
Lakes (Water Convention), established in 1992 by the UN Economic Commission for Europe. It
is intended to strengthen national measures for the protection and ecologically sound
25
management of transboundary surface water and groundwater and obliges parties to prevent,
control and reduce water pollution from point and non-point sources. The UN Convention on
the Law of the Non-Navigational Uses of International Watercourses is, however, the only
comprehensive international legal framework for guiding transboundary water conflicts. The
Convention consists of a set of guidelines to encourage bilateral and multilateral co-ordination
without sanctions. To date it has been ratified by only 16 countries and is therefore not fully
operational. The potential for conflict over water is increasing and increased international
efforts are needed to solve transboundary water conflicts.
Governance and water utilities
Over 90% of domestic water and wastewater services world-wide are provided by the public
sector and this is likely to remain the case. Often the services provided are adequate but in
some cases they are poor and inadequate finance is available to secure good quality services
through the public sector. The introduction of private utility companies to provide domestic
water services has raised considerable concern with some NGOs, public sector unions and
others. Too often the debate is ideological and misses the point. All parties accept that business
should not own or control fresh water (WBCSD, 2002), however, business can take on
responsibility for management of services and even build and own infrastructure under
government supervision and regulation – talk of ‘privatisation of water’ is thus misleading and
can be mischievous. The private sector has taken over responsibility for the management of
services from weak, poorly funded public utilities in several large cities in developed and
developing countries. The results have been mixed, but usually showing good economic
outcomes and improved distribution to a wider group of citizens. However, one lesson is clear,
without the necessary governance framework for regulation, water utilities, whether publicly or
privately supplied, will remain inefficient. Too often the performance of the utility operator is
overshadowed by the poor governance structures that exist in society. In particular, the public
sector operator must work more transparently for the benefit of the consumer and not for the
workers or bureaucracy. The process for appointing private operators has to be transparent and
governments need to get the support of the user-consumer.
The involvement of the private sector in Latin America has had mixed results with some clear
success in extending service coverage and quality (Rogers, 2001). However, there are
difficulties that have to be overcome. In Cochabamba, Bolivia (Finnegan, 2002), for example,
unrealistic objectives, inadequate consultation, corruption, poor contracts and the lack of
26
transparency resulted in a fiasco that has put back the provision of services and probably
condemned the local people to a continuing saga of inadequate water services possibly for
decades. This was a governance failure and similar failures are common throughout the
developing world whether the service provider is public or private. The introduction of private
operators needs to be carried out by taking account of the attributes for effective water
governance (as given above). Some general principles for good utilities governance include:

Extensive social and parliamentary debate to reach consensus on private sector
participation;

Design of an adequate system of subsidies to ensure the needs of the poor are satisfied;

Economic assessment of long term affordability of privatised services, including the
impacts that any government guarantees, for example on exchange rates, would eventually
have on the efficiency of purveyors and on public deficits;

Incorporation to the extent possible of effective competition;

Design to take maximum advantages of economies of scale and scope;

Assurance of reasonable rates and returns, transferring efficiency gains to the consumers;

Control of price changes;

Provision of timely and adequate information to consumers and regulators, including state
of the art regulatory accounting;

Provision of opportunities for meaningful and opportune users’ participation;

Setting up independent and capable regulatory bodies;

Design of conflict-solving mechanisms that ensure social, environmental and economic
factors relevant to governance are adequately considered when adjudicating conflicts.
It is also critical that before considering foreign private sector operators governments take
account of any international trade agreements that may affect contractual relations between the
parties (see Section II).
27
IV
Some Final Observations
We started with a review of the conceptual and empirical foundations of effective water
governance before developing some principles and examining some cases. We have found that
while there are many different schools of thought concerning theory, the practice will vary
depending on the external environment, developed countries moving towards flexibility and
distributed governance systems whilst developing countries are characterised by rigidity and
hierarchical and light governance systems. We have noted that both internal and external
governance is critical to water resources development and management and IWRM cannot be
applied effectively if the political and external governance systems are not conducive.
Some general observations about effective water governance based upon this paper are:
•
External environment: Governance depends to a large extent on the underlying political
and cultural conditions as well as economic factors and there is no one prescribed
approach to governance that will work in all cases. The role of governance mechanisms
outside the water sector is critical to the success of water governance within the sector.
The importance of international agreements, especially those related to trade, must be
understood and water officials must actively engage with their trade counterparts.
•
Partnerships: Whilst distributed governance and the need to involve civil society and the
private sector is promoted, the key role of government and public sector workers is
recognised as critical for the proper stewardship of water as a common pool resource. The
role of government in sponsoring civil society can be pivotal in good outcomes. The basis
for negotiations over shared waters should be the shared benefits and costs for all parties.
•
Stress: The development of water governance in the developed world was typically driven
by internal forces (economy, population, declining resources, political pressures). The
developing world is experiencing external pressures from donors, and international NGOs
in addition to the same internal pressures as the developed countries.
•
Sequencing: Institutions, laws, and management systems develop slowly and adapt to
often rapidly changing environmental conditions. It is important that countries tackle
critical issues first and adopt a pragmatic approach accepting what is politically feasible
rather than theoretically the best solution.
28
•
Simultaneity: The current rapid pace of economic, social, and environmental change
threatens to overwhelm the capacity of developing countries to develop laws, institutions,
etc. at a more measured pace.
•
Sustainability: Because of the simultaneity of pressing development issues, nations must
resist the temptation to follow the sequencing of concerns as happened historically in the
North. Under present conditions sustainability and economic development cannot be seen
as separable.
Governments face considerable stress from the weight of critical water problems. It is important
that governments appreciate that they cannot solve these problems working alone. Working
with civil society and with the market (especially the local private sector), although less orderly
and structured, is the only way forward. Governance systems must permit all stakeholders to
engage actively in and solve the growing water problems.
Many water-short developing countries are facing, simultaneously, many pressing development
issues. The water crisis requires nations to act now to put their governance systems in order.
They cannot afford to postpone sustainability goals or follow such gradual sequencing of
concerns seen in earlier historical cases such as in the USA or Europe. Under present
conditions sustainability and development are not separable. Apart from the severity of the
crisis that many countries face, the most efficient moment to build sustainability into a water
system is in the early stages of its planning and design. This simultaneity of problems does not
allow governments to remain entrenched in the old hierarchical governance systems. As
required under the Plan of Implementation of the WSSD, each country must develop IWRM
plans and strategies that set out the sequence of changes needed to meet specific pressures. It is
incumbent on the international circle of experienced water managers to provide practical help to
those facing intensely stressful situations by shaping and espousing the principles of IWRM, so
that they make long-term prudence actually achievable in present real-world circumstances.
More decentralisation is needed in water governance along with a stronger central role in
IWRM. This must be accompanied by the necessary financial resources and human capacity
development at the local level. A clear demarcation of roles and responsibilities at different
levels should be agreed and understood by all parties inside and outside government.
Community level involvement is especially important to overcome local environment and
development conflicts, property rights, equity and literacy issues. Local government and
29
municipal levels often have deep knowledge of local affairs but are weak and can be bypassed
by central authorities or powerful elites. Clear priorities are the involvement of the nontraditional players - strengthening local water associations, efficient and effective public water
resource management and building capacity of stakeholders - and ensuring attractive working
conditions that keep workers in the sector and in the country.
Encouraging a water-oriented civil society is one way to encourage voluntary water
conservation and intelligent responses to classical regulatory and economic instruments.
Creating such “basin societies” also creates local watchdogs that can both monitor and support
government actions and policies or help to regulate public-private arrangements to overcome
some of the institutional weaknesses mentioned in this paper. Involving civil society in a
constructive manner also makes the resolution of water conflicts more amenable to arbitration
and final settlement.
Actions for improving water governance
To achieve more effective water governance it is necessary to create an enabling environment
which facilitates efficient private and public sector initiatives. This requires a coherent legal
framework with a strong and autonomous regulatory regime. Clear transactions between
stakeholders is needed in a climate of trust with shared responsibility for safeguarding water
resources whose management affects many people but at present is the responsibility of none.
Actions to make water governance effective include (GWP, 2000):




Raising political will to overcome obstacles to change;
Putting integrated water resources management (IWRM) into practice;
Reforming and developing water institutions;
Realigning financial and economic practices.
Even with sufficient political will many officials are unsure how to react to the water crisis and
there is a need to build trust between different stakeholders and politicians at different levels of
authority. During 2002, the GWP, in partnership with the United Nations Development
Programme (UNDP) and the International Council for Local Environmental Initiatives (ICLEI)
and others, established a “Dialogue on Effective Water Governance” which was launched at the
UN World Summit on Sustainable Development as a Type II implementation partnership. The
Dialogue aims to facilitate national and local level dialogues to help build distributed
governance systems by adding value to existing processes.
30
The World Water Council is presently preparing a World Water Action Report to catalogue
actions that have been undertaken to meet the various international calls for action that have
been made since the 2nd World Water Forum in The Hague. Many of these actions are working
towards more effective water governance: for example revised laws, institutional reforms, the
introduction of economic instruments and social reforms such as gender mainstreaming and
decentralisation. The Building Partnerships for Development (BPD) initiative brings together
public, private and civil society actors to help communities implement their own development
activities and has, for example, examined regulatory issues for each partner. The GWP Central
American partnership has discussed water governance with the National Legislative Assembly
in Costa Rica and this has led to a process for multi-stakeholder involvement in the drafting of
new water laws. The GWP Central and Eastern Europe are looking into the governance aspects
of water legislation linked to prospective membership of the European Union.
Finally, it is acknowledged that development in poorer countries is dependent on infrastructure
and innovative technological development. Establishing effective water governance is
complementary to this and provides the environment to ensure that the equally important
investment in physical works is appropriate, long-lasting and effective. It is also recognised that
governance requires change, which is often resisted, and by its nature it involves political
debate. Achieving effective water governance cannot be undertaken hastily using blueprints
imported from overseas; it needs to be developed to suit local conditions with the benefit of
lessons learned from all over the world.
31
Table 1: IWRM TOOLS ADDRESSING GOVERNANCE FAILURES
Governance failures
IWRM tools





Failure to correct market distortions
Inappropriate price regulation
Perverse subsidies to resource users and polluters
Inappropriate tax incentives and credits
The existence of upstream downstream externalities
(environmental, economic and social)
Policies
Economic instruments
Financing and incentive structures



Over-regulation or under-regulation
Conflicting regulatory regimes
No independence and impartiality of the organisms
of regulation
Provision of water services are natural monopolies
Regulatory instruments
Institutional capacity building




Imprecise reflection of consumer preferences
Short-sightedness
Voter ignorance and imperfect information
Special interest effects, including political
weaknesses and vested interests
Information management systems
Water campaigns and awareness raising

Little entrepreneurial incentives for internal
efficiency
Role of the private sector

The inability of the government to control and
regulate the sustainable use of water
The non-payment of services linked to water
Bureaucratic obstacles or inertia
Lack of an overall responsible authority
Institutional roles
Social change instruments

The lack of effective knowledge of the resource, the
demands imposed on the it and the current uses that
are made of it
Water resource assessment
Plans for IWRM



Ill defined property rights, unclear ownership
Absence of or inappropriate legislation
Unclear ownership of property rights
Legislation
Water rights

Ignorance and uncertainty about water markets,
droughts, floods, etc, leading to inability to set
prices correctly
Water resource assessment
risk assessment and management




Note: The IWRM tools and references are from the GWP ToolBox for IWRM, 2001 – please note, a revised
version of the ToolBox will be released in 2003 and the above tools may vary slightly.
32
BOX 1: WATER RESOURCE MANAGEMENT REFORMS IN CHILE
The Chilean approach to water resources development and management and the basis for much of the
well-known Chilean reform programme is outlined in the Water Code of 1981. This acknowledges that
water is a factor of production in many sectors and must be transferable like any other economic input; It
acknowledges the inappropriateness of linking a mobile, flow resource (water) to an immobile, stock
resource (land) and the importance of separating water rights from land rights. It treats water rights as any
other property rights, allowing for leases and sales between willing buyers and sellers. The Directorates
of Water, of irrigation and of planning of the Ministry of Public Works define water management
policies, assign water rights, perform hydrological studies and monitoring, and construct the major
irrigation infrastructure.
The reforms were carried out in the context of the successful export-oriented, market-based
approach to economic development that Chile has followed since the 1970s. The role of the private
sector in hydropower development also had a large impact on water policies. The reform programme is
generally considered a success, but there are significant resource management problems which the
Government of Chile recognises and has started addressing. Conflicts have included consumptive uses
and non-consumptive uses not anticipated in the initial assignment of rights, concerns for environment are
not adequately addressed in the current system. As scarcity becomes more widespread, there is a need to
regularise and formalise traditional water rights, greater attention to the economic management of
groundwater and management of the conjunctive use of ground and surface waters, and improve the
administrative and judicial system for dealing with water disputes. The Chile experience demonstrates
that IWRM is a dynamic and iterative process and needs to be constantly refined.
33
BOX 2: IRRIGATION REFORM IN MEXICO
This was prompted by policies set out in the National Development Plan (1989-94). The National Water
Plan (1975) provided the legal basis for water resources management and development and a new
National Water Law was established in 1992 to supersede the Federal Water Law of 1972. A National
Water Commission (CAN) was created in 1989 as an Apex body responsible for the administration of
water within watersheds and for providing technical support to 32 State offices. “Hydro-social” units
were created, called módulos, and farmers willing to organise themselves to operate, maintain and
manage the módulo have to form a non-profit organisation (Asociación Civil). The modulos are thus
legally established Water User Organisations and are entitled to collect and administer the water fees
received from users. At a district level, the WUOs may form an organisation (Sociedad de
Responsabilidad Limitada de Interés Público (SRL)) to operate and maintain main canals, large drains,
roads, etc.
The reforms were driven by external governance factors including the membership of NAFTA
that forced efficiency improvements in irrigated agriculture to compete with US and Canadian agroproducts. This also coincided with a period of rapid economic and social change in Mexico with major
political upheavals in the traditional governing party. To date the outcomes have been positive with
water fees paid by water users up from 18% (in 1988) to 80% of O&M. Water distribution efficiency rose
by 8% to 65%. There has been a general reduction in O&M costs with transfer due to better use of
equipment and machinery, and a reduction in personnel of more than 50%. Some 80% of farmers
surveyed in four irrigation districts stated that transfer had improved water management. 45% claimed
that the fees were high, but most users believed that communication between stakeholders was
acceptable. Although some WUOs endure financial difficulties in times of water shortages or heavy
rainfall most have achieved financial self-sufficiency. Although it is too soon to make a definite
evaluation of the reforms and there are still many difficulties, it does demonstrate that even a complex
transfer within a formerly highly centralised government-owned system can be achieved in a relatively
short time of about 10 years.
34
BOX 3: MANAGING SHARD WATERS IN THE LAKE PEIPSI/CHUDSKOE BASIN
Following the break-up of the Soviet Union Lake Peipsi became a shared water body and new
mechanisms were needed for its management. The environmental quality of Lake Peipsi has been
deteriorating for the past fifty years. Political changes and the need for economic co-operation of the lake
(for fishing, transport, etc) has stimulated transboundary co-operation following IWRM principles. Lake
Peipsi/Chudskoe is situated on the border between Estonia and Russia. The catchment is shared by
Russia, Estonia and Latvia. Lake Peipsi has unique natural characteristics – it is shallow, eutrophic and
biologically productive, with substantial fish resources and wetlands of international importance (Ramsar
site). About 1 million people live in the catchment. In 1997, five years after the border between Estonia
and Russia was re-established, the riparian governments signed an Agreement on the Protection and
Sustainable Use of Transboundary Water Bodies. An intergovernmental commission was established to
co-ordinate the implementation of this agreement. Along with the existing formal framework for cooperation in the Lake Peipsi region, a network of regional and local authorities, universities, NGOs and
businesses is emerging, providing a good basis for implementing IWRM principles in this region. The
Lake Peipsi/Chudskoe experience illustrates the importance of riparian countries having the political will
to implement changes; the importance of the development of formal frameworks for co-operation to
implement policies relating to water resources.
The importance of international financial and technical assistance to implement national policies
dealing with water resources as well as intergovernmental transboundary water agreements; the role of
research and educational projects in generating a water knowledge base and developing capacity;
In practice, the effective involvement of civil society was found to be difficult. Even though formal
mechanisms for developing co-operation between stakeholders were set up, only a few regional NGOs
are actually involved in the work of the Transboundary Water Commission. The capacity of most local
NGOs and stakeholder groups is low and external financial support is necessary to improve this situation.
Practical issues (different working languages, different norms) hindered co-operative activities
Co-operation over Lake Peipsi demonstrates how integrated water resource management tools can be
applied to transboundary waters shared by countries in transition. It illustrates how a range of tools need
to be used together to incorporate IWRM principles into managing the transboundary waters of the Lake
Peipsi Basin. In addition, it demonstrates that developing co-operative approaches to water management
enables the ecologically sustainable use of natural resources while improving the social and economic
conditions and quality of life of people in the region. A distributive governance system is emerging that is
a good basis for implementing integrated water resource management principles in the lake basin.
35
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